the biggest financial sector deals of the year asia ... · the biggest financial sector deals of...

The biggest financial sector deals of the year Asia Pacific - 2015

Portfolio Lead Advisory Services

Table of Contents Content Page

1 Market Update – AsiaPac 4

2 Market Overview – China 8

3 Market Overview – Australia 14

4 Market Overview – Hong Kong 19

5 Market Overview – Japan 24

6 Market Overview – Korea 29

7 Market Overview – Indonesia 35

8 Market Overview – Thailand 40

9 Market Overview – Taiwan 44

10 Market Overview – Philippines 48

11 Market Overview – Vietnam 53

12 Glossary 58

13 Appendix 60

14 Appendix I Other Transactions in AsiaPac 61

15 Appendix II Sub $50m Transactions in China 63

16 Appendix II Sub $10m Transactions in AsiaPac 64

3

Contact

Jonathan Daniel Head of Portfolio Lead Advisory Services, Japan [email protected] Tel: +81 90 6010 5286

Deloitte Tohmatsu Financial Advisory LLC Tel: +81 3 6213 1180 www.deloitte.com/jp/en

Taro Kuryuzawa Head of Institutional Investors Coverage CFA, Japan [email protected] Tel: +81 3 6213 1180 Mob: +81 80 4435 1420

4

Market Update – AsiaPac

Deloitte research confirms that financial sector based deal flow in Asia Pac exceeded $70bn in 2015 with almost 200 transactions brought to market

AsiaPac 2015

5

Market update The world economy has slowed down significantly. Volatility in China and Europe, high sustained unemployment levels especially in Europe, falling commodity prices and geopolitical issues such as migration, civil conflict and terrorism are all damaging the prospects of a global recovery. Certain developed countries saw growth improvement in 2015, notably the US, UK and Japan but the economy for each is fragile and continued growth uncertain. With regards Asia and Australasia, according to The Economist Intelligence Unit, growth remained at 4% in 2015 impacted by the slowdown in China. Notwithstanding the weak demand of key trading partners, growth for the region is forecast to increase to 4.1% in 2016 as many countries are benefiting from lower oil prices and better economic conditions before falling to an average of 3.9% a year through 2017 – 2020 due to lower investment spending. Despite the softer economic backdrop, 2015 was the busiest year ever for mergers and acquisitions, with global M&A volume surpassing $5 trillion, according to Dealogic. In this inaugural Deloitte report, we focus on Asia Pacific and, specifically, the financial services sector covering both equity and asset transactions (loan portfolios). The types of businesses covered in our analysis include banks, leasing companies, auto, consumer and micro-finance businesses and credit card companies. In 2015, we saw almost 200 transactions covering more than $70bn of deal value brought to market. Most of the markets in AsiaPac saw some financial sector deal activity during the year. Without doubt, it is the Chinese market where activity has been the most significant (in terms of value), with more than $22bn of deal value from 41 transactions representing 32% of the region’s deal value.

2015 Full-Year

$70,280m (193

deals)

2015 H1 $21,351m (84 deals)

Activity by year (Announced Deals)

60

41 22

17

13

11 8

8

Number of announced deals 2015

Korea China Japan

Australia Thailand Indonesia

Philippines Vietnam Hong Kong

Singapore Cambodia Taiwan

New Zealand Brunei Samoa

4

2 2 2 1 1 1

Source: Mergermarket, Deloitte research

$18,333m

$51,947 m

Activity by type (Deal Value)

Cross-border Domestic

6

Cambodia non-

disclosed

Brunei, 47

Samoa, 71

New Zealand,

80

Singapore, 202

Vietnam, 1,025

Philippines, 1,506

Taiwan, 1,592

Thailand, 1,819

Indonesia, 2,303

Korea, 5,188

Japan, 9,840

Hong Kong, 9,899

Australia, 14,252

China, 22,456

Activity by country

Deal Value USD(mn)


At the opposite end of the spectrum, we found no reported transactions in Malaysia and only single deals in Brunei, New Zealand and Samoa. The most common type of transaction was a bank acquisition with $33.4bn of deal value compared to $14.7bn of portfolio trades and $13.5bn relating to leasing assets. In terms of an attractive market for foreign investors, Indonesia was the most appealing with ten cross border transactions. We are mindful that not all trades are publicly announced especially in the loan portfolio space and for some disclosed transactions, deal value was not provided. For loan portfolios, we have included data received from clients, market participants and the Deloitte network whereas for equity transactions, our research is limited to Deloitte public research sources (Mergermarket). Notwithstanding the continued weakness of the global economy, we expect greater deal flow in 2016 than 2015 as banks search for better returns in a low / negative interest rate environment in the region. We do not expect significant inward activity from European and US financial institutions into Asia Pacific but anticipate Japanese and Chinese banks continuing to look for strategic investments and Japan-based financial investors seeking investments in NPL books in the region, especially Thailand. Other countries where we predict further activity, beyond the four largest countries shown opposite, include Indonesia and Philippines, as a result of regulatory change which encourages foreign direct investment into the respective banking sectors. Regards, Jonathan Daniel Tokyo

33,395

14,704 13,518

6,531 1,227 505 277 107 10 6

Activity by asset type

Deal Value USD(mn)

7

33,597

10,728 10,458

4,706 1,611 1,589 1,439 1,319 1,126 1,104 1,090 1,025 210 109 71 51 47

Buyers by country

Total deal value USD (mn)

1,354 2,674 8,847 7,680

28,000 21,725

>50mn 50~100mn 100~500mn 500mn~1bn 1~5bn 5bn<

Activity by deal size

Total deal value USD (mn)


8

Market Overview China

China China’s $22bn of deals represents almost a third of the total deal value for the region

9

2015 Full-Year

$22,456mn (41 deals)

2015 H1 $7,949mn (18 deals)

Activity by date (Year 2015)

Consumer Finance $40mn (1 deal)

Microfinance/Microcredit

$188mn (7 deals)

Autofinance $430mn (1 deal)

Portfolio $498 mn (1 deal)

Leasing $6536mn (22 deals)

Bank $14,764.4mn

(9 deals)

Activity by asset type (Year 2015)


China Market Overview

10

Car sales rose sharply in 2015 after the sales tax on small vehicles was lowered. The implicit government support for its banks and deposit guarantees should protect banks from any collapse notwithstanding increasing NPLs. These NPLs are likely to be corporate positions as household leverage is low. Banking Industry Stress in the banking sector will increase in 2016 - 2020 with an increase in NPLs following China’s post 2008 lending surge. The NPL ratio was 1.67% at the end of 2015 and totaled $196.6bn according to a Reuters report although some people consider this to be understated. State owned asset management companies will continue to acquire NPLs from the state owned banks. The shadow banking market is expected to continue to grow and the regulators will seek to increase their oversight towards this subsector. The aging population will create opportunities for new savings and pension products to be designed by the banks. Chinese banks are some of the largest in the world in terms of market capitalization. Much of their lending has been to state owned businesses or local governments and the 2008 - 2012 period saw excessive and aggressive lending. As a result, concerns with the serviceability of such debt in an economy with lower growth now exist. Extend and pretend lending decisions may increase at the expense of hard defaults. A downturn in real estate prices could hit NPL levels but the government continues to promote real estate prices with its relaxed lending criteria, for example the deposit requirement for first time buyers was reduced from 25% to 20%. During 2015, the Chinese government announced that it would permit the establishment of more privately owned banks and that it had received more than 40 applications. At the moment, the biggest state owned banks (ICBC, China Construction Bank, the Agricultural Bank of China and Bank of China) effectively operate as a monopoly. Foreign banks are marginal players with the exception of those that have focused on wealth management products. We expect that there will be greater overseas investment among the Chinese banks than that seen in the first part of the decade.

Macroeconomic Overview

The fiscal deficit is set to widen as the government tries to stimulate the slowing economy by raising spending. EIU predicts that the economy will expand by an average 5.3% per annum for the period 2016 – 2020. In 2015, annual GDP growth was 6.9% and 6.5% is expected for 2016 as a result of the strong housing market and property development. Consumer spending should slow down in line with lower growth levels and lower wage inflation. The fiscal position for China will deteriorate in 2016 - 2020 as it seeks to spend its way towards greater growth. Government is targeting annual economic growth of 6.5% - 7% per annum in order to meet the goal of doubling GDP by 2020 over its 2010 level. To achieve this target, the central bank reduced interest rates but this runs the risk of excessive credit growth. The level of outstanding domestic credit grew by 23.7% in 2015 although EIU expects that credit growth will recede in 2018 - 2020. Inflation of 1.5% in 2015 is expected to increase to 2.1% for 2016 - 2020 due to imported inflation (as the renminbi weakens) and higher commodity prices from beginning around 2017, especially oil which has a big influence on local food and transport costs. Inflation would be even higher if not for the industrial overcapacity. Unemployment was 4% at the end of 2015 and is expected to remain below 4.5% to 2020. The population of China is 1.4 bn. There is the threat of greater unemployment due to the industrial overcapacity but government will seek to limit redundancies and avoid social unrest. Housing prices continue to grow in selected cities and contribute to development activity. Housing price growth is being fanned by less stringent mortgage and down payment policies.

11

business) and its acquirer, HNA Capital, a banking, leasing (top 4 in China’s aviation industry) and financial services conglomerate. In December, China Shipping Container Lines, China Shipping Group Company (COSCO) and COSCO Pacific announced a large-scale restructuring and consolidation due to the decelerating economy and stagnation within the container shipping market. The restructuring, which involved four listed companies, seven stocks and 70 asset transactions, will create the world’s fourth largest container line company. As part of the transaction CSCL acquired COSCO’s 13.67% equity in China Bohai Bank for $847m. China Bohai Bank is a commercial bank in Tianjin. With regards to loan portfolio transactions, RBS announced the sale of its Chinese corporate loan portfolio (GBV $594m) to China Construction Bank for $498m. The same bank earlier in the year had acquired an Australian loan portfolio from RBS.

2015 at a Glance

The Chinese market was the most active of all the countries covered in this report with 41 deals worth $22.45bn. The majority of the activity related to leasing businesses but the largest transactions involved banks. The largest transaction in 2015 was the purchase of a 17% stake in the state-owned China Postal Savings Bank by an investment group led by China Life Insurance Company Limited and including UBS, Temasek, JP Morgan, IFC, DBS and Temasek, among others. China Postal Savings Bank is the 6th largest lender in China (by assets) and is expected to launch an IPO in 2016. It has approximately 40,000 branches, twice that of ICBC, China’s largest lender by assets and 490mn customers. The Bank’s management advised that “Postal Savings Bank needs to enhance its high-risk management capabilities as it faces complicated global and economic changes”. It was reported that JP Morgan would provide support and expertise to the Bank as part of the deal. Another Chinese insurance company and another bank. PICC Property and Casualty Company Limited bought Deutsche Bank’s entire position in Huaxia Bank Co Limited for $3.973bn. Deutsche had acquired its stake in 2006 but as the Bank began to execute its new strategic agenda, which included approximately 9,000 job redundancies and business divestments in 10 countries, a sale of Hua Xia was considered appropriate. Deutsche advised that China remains a key growth market for the Bank. Hua Xia Bank Co Limited is primarily a retail bank and is focusing on the SME sector. In addition to Deutsche reducing some of its exposure to China, Spain’s second largest bank, BBVA, received $1.695bn from a property developer for a 4.9% equity stake. The Spanish bank still holds 4.7% in CITIC. In 2013, BBVA owned more than 10% of CITIC but has been reducing its exposure to China (as have other foreign banks, BAML and Goldman Sachs) through this and other sales. In the leasing sector, the largest transaction involved Tianjin Bohai Leasing (an infrastructure leasing business and reported to be the world’s largest container leasing

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Cross-border

JIC Leasing Co., Ltd.(25%)

Jun-15 Leasing China Merchants China DirectInvestments Limited; CarlyleAsia Growth Partners IV, L.P.

155

Domestic Huaxia Bank CoLimited (19.99%)

Dec-15 Bank PICC Property and CasualtyCompany Limited

Deutsche Bank AG 3,973

China ShippingLeasing Co., Ltd.

Dec-15 Leasing China Shipping (Group)Company

283

China ShippingInvestment Co., Ltd.

Leasing China Shipping (Group)Company

537

China Bohai Bank(13.67%)

Bank China Ocean Shipping(Group) Company

847

China ShippingFinance CompanyLimited (40%)

Leasing China Shipping (Group)Company

79

Jiangsu RunxingFinancing Leasing CoLtd (75%)

Leasing Baota Industry Co Ltd Xie Zhikun (Private Investor) 291

China Postal SavingsBank (16.92%)

Dec-15 Bank An investment group led byChina Life Insurance CompanyLimited

7,027

Bank of Hebei Co.,Ltd. (8.78%)

Dec-15 Bank Nanjing Chixia DevelopmentCo., Ltd.

Nanjing Chixia ConstructionGroup

217

Beijing JingchengInternational Financingand Leasing Co., Ltd.(75%)

Nov-15 Leasing Beijing Jingcheng MachineryElectric Company Limited

Beijing JingChengMachinery Electric HoldingCo Ltd

58

Fujia Financing andLeasing Co., Ltd.(75%)

Nov-15 Leasing Zhejiang Kangsheng Co., Ltd. Xie Zhikun (Private Investor) 106

Shenzhen CarleFinance Co Ltd (60%)

Oct-15 Bank Beijing Kingee CulturalDevelopment Co Ltd

Shenzhen Carle JewelleryCo Ltd

76

Huazhong Financingand Leasing Co Ltd

Sep-15 Leasing Jiangsu Fasten Co Ltd Zhongzhi CapitalManagement Co., Ltd.;China Profit InvestmentsLimited

332

CITIC BankInternational (China)Limited (100%)

May-15 Bank CTBC Financial Holding Co.,Ltd.

CITIC Bank InternationalLimited

384

Fenghui Leasing CoLtd

Apr-15 Leasing Goldleaf Jewelry Co Ltd An investor group led byAnhui Shengyun MachineryCo Ltd

1,632

Bohai Leasing Co Ltd(42.44%)

Apr-15 Leasing An investment group led byHNA Capital Holding Co Ltd

2,616

Bank of Shanghai CoLtd (3.7%)

Apr-15 Bank TCL Corporation 545

Bank of Deyang(58.14%)

Mar-15 Bank China Great Wall AssetManagement Corporation

Chongqing AutoFinance Co Ltd (80%)

Feb-15 Autofinance Chongqing ChanganAutomobile Company Ltd ;China South Industries GroupCorporation; China SouthIndustries Group Finance CoLtd

430

Anhui Dexin FinancingGuarantee Co Ltd;Hefei Deshan SmallClaims Loans Co Ltd(55.83%); AnhuiDerun Leasing Co Ltd(60.75%); Anhui DehePawnshop Co Ltd(68.86%); AnhuiDezhong FinanceInformation ServicesCo Ltd (67.5%)

Jan-15 Leasing Anhui Chaodong Cement CoLtd

An investor group led byAnhui Xinli Investment CoLtd

273

China CITIC BankCorporation Ltd.(4.9%)

Jan-15 Bank Xinhu Zhongbao Co Ltd Banco Bilbao VizcayaArgentaria S.A.

1,695

Sub-total 21,556Deals sub $50m 402TOTAL 21,958

China Shipping Container LinesCompany Limited

China Transactions 2015

12

Equity Transactions

13

Loan Portfolio Transactions


Deal Type Name Date Asset Type Buyer Seller Value ($'m)Portfolio RBS Loans Sep-15 Portfolio China Construction Bank RBS 498TOTAL 498

14

Market Overview Australia

Australia There were no bank transactions in 2015 and auto finance was a key asset class along with other forms of leasing

15

SME Finance $10mn (1 deal)

Consumer Finance $75mn

(3 deals)

Other $107mn (1 deal)


Autofinance $6,035mn (2 deals)

Portfolio $7,754mn (4 deals)


2015 Full-Year

$14,252mn (17 deals)

2015 H1 $5,059mn (9 deals)



Australia Market Overview

16


The central bank is likely to keep its official cash rate at 2% until Q1 2017 (it was cut in 2015 by 50 basis points) when EIU expects the bank to begin to tighten monetary policy. Real GDP growth for 2015 was estimated by EIU to be 2.3%. It is expected to average 2.6% per annum for 2016 - 2020. Consumer and government spending both contributed to the growth. Unemployment was 5.8% in December 2015 (the population is 23.9mn) and is expected to drop to 5.3% by 2020. From 2016 - 2020, the mining sector is likely to be a key concern for government as investment in the sector contracts and government revenues decline due to the declining commodity prices of gold, iron ore, copper and liquefied natural gas. The transition from investment in the sector to production and extraction will need to be carefully managed. There have been a number of planned projects cancelled or deferred which has impacted regional employment levels. The government is trying to control house price increases in Sydney and Melbourne via increased interest rates for real estate investors and those with interest only real estate loans. Real estate investors accounted for 54% of new loans in May 2015 although this has since reduced to 46%. EIU expects house prices to ease in 2016 due to the lower levels of real estate lending and this could impact consumer spending. Private consumption should still grow in 2016 - 2017 with increased household wealth (largely through house prices) as well as higher wages and lower unemployment promoting greater discretionary spend. Private consumption is expected to grow by 2.8% per annum to 2020, according to EIU.

Banking Industry

The banking sector functions well with domestic and foreign banks both competing for services. The sector employed 3.3% of the labour force as of August 2015 and accounted for almost 9% of GDP. As of December 2015, there were 157 authorized deposit taking institutions in Australia which include local banks, building societies, credit unions, foreign banks and branches. The four biggest domestic players are: Commonwealth Bank of Australia, National Australia Bank, Westpac and Australia and New Zealand Bank. Growth in consumer credit has been driven by a culture for home and car ownership. The level of private sector credit to GDP was 158% in 2014 (up from 109% in 2000 but below the 187% peak in 2009). Consumer lending is expected to grow at an average of 4.5% per annum from 2016 – 2020. In addition to mortgages, credit cards are also widely used as the foreign banks are particularly active. Corporate borrowing has been less aggressive following the global financial crisis and banks have been reluctant to lend. However, lending to corporates has grown recently and as at December 2015, the outstanding stock of business credit was 6.8% above December 2014 levels. Exposure to residential lending is a risk for the banks. The big 4 banks cover 80% of mortgage lending and there are concerns of a real estate bubble, especially in Sydney. NPLs are relatively low and the official NPL ratio as of December 2015 was 1%. 2015 at a Glance

The most significant deal in Australia was Macquarie Group’s acquisition of Esanda Finance from ANZ. Esanda provides vehicle finance for consumers and businesses. The consideration was $5.926bn. For ANZ it was deemed a non-core divestment whereas for Macquarie it supplements existing similar businesses. Upon completion, Macquarie Leasing’s vehicle finance portfolio will increase from c$6.5bn to $12bn. Macquarie Group invested a further $4bn in acquiring a leasing portfolio of 90 aircraft from AWAS Aviation Capital Limited.

17

Other leasing transactions include:- • Monash Private Capital acquiring Alleasing Pty

Ltd for an estimated $134mn from CHAMP Private Equity. Alleasing focuses on agricultural, healthcare and manufacturing assets.

• SG Fleet Group Limited (a listed fleet management business previously a CHAMP Ventures investment) invested $109mn in nlc Pty Ltd an autofinance business. SG Fleet manages in excess of 83,000 assets in Australia, New Zealand and UK. Nlc Pty Ltd

In the loan portfolio space, there were some high profile ‘non-core’ transactions in Australia with four divestments by GE Capital totalling $9bn of assets according to management and one by RBS. The RBS portfolio, which was understood to include $1.5bn of high quality assets, was acquired by China Construction Bank. The GE Capital books (where disclosed) include; $6.1bn of credit cards and personal loans in their consumer finance business were acquired for $0.917bn (a further $5.35bn of debt acquired in the deal will be securitised) by a consortium including Deutsche, KKR and Varde while the commercial lending and leasing book was sold to Sankaty for $1.337bn. We do not expect there to be any sizeable non-core transactions in 2016 as most of the foreign banks that were looking to exit or deleverage have now done so.

Australia Transactions 2015

18


Equity Transactions Deal Type Name Date Asset Type Buyer Seller Value ($'m)Cross-border

nlc Pty Ltd Nov-15 Autofinance SG Fleet Group Limited Lanlow (Pty) Ltd.; NLT (Pty) Ltd.; D Wilson Holdings (Pty) Ltd.; Mfsquared (Pty) Ltd.

109

Australian Spot Loans Group of companies

Apr-15 Consumer finance Southern View Finance Ltd

Domestic Platform Finance and Leasing Group Pty Ltd (60%)

Dec-15 Leasing Armidale Investment Company Limited

17

Bibby Financial Services Australia Pty Ltd

Nov-15 Other Scottish Pacific Group Bibby Line Group Limited 107

Esanda Finance Corporation Limited (Dealer finance business)

Oct-15 Autofinance Macquarie Group Limited Australia and New Zealand Banking Group Limited

5,926

Alleasing Pty Ltd Oct-15 Leasing Monash Private Capital Pty Limited

CHAMP Private Equity Pte Ltd

134

Force Corp Aug-15 Leasing Coates Hire Limited 32

United Financial Services Group

Jul-15 Consumer finance McMillan Shakespeare Limited 31

Hofco Oilfield Services Pty. Ltd.

May-15 Leasing Undisclosed bidder Titan Energy Services Limited

11

Cashflow Finance Australia Pty Ltd

Apr-15 SME finance CML Group Limited 10

Direct Money Pty Ltd Mar-15 Consumer finance Basper Limited 44

Rentco Pty Ltd Mar-15 Leasing Emeco Holdings Limited 63

CQ Group Heavy Haulage and Cranes Pty Ltd.

Jan-15 Leasing NQ Group Pty Ltd 14

Sub-total 6,498Deals sub $10mTOTAL 6,498

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Portfolio General Electric

Company (Australianand New-ZealandCommercial Lendingand Leasing portfolios)

Nov-15 Portfolio Sankaty Advisors, LLC General Electric Company 1,337

Corporate Jun-15 Portfolio CCB International RBS 1,500GE Money Australia &New Zealand

Mar-15 Portfolio Deutsche Bank AG; KohlbergKravis Roberts & Co. L.P.;Varde Partners, Inc.

GE Capital Corporation 917

AWAS Aviation Capital Mar-15 Portfolio Macquarie Group Limited 4,000TOTAL 7,754


19

Market Overview Hong Kong

Hong Kong HK had the largest transaction last year with China Cinda AMC paying almost $9bn for Nanyang Bank

20

2015 Full-Year

$9,899mn (4 deals)

2015 H1 $201mn (1 deal)


Bank $8,772mn (1 deal)

Leasing $1,127mn (3 deals)



Hong Kong Market Overview

21


The Hong Kong economy saw GDP growth of 2.4% for 2015. Services are the main contributor to GDP, predominantly financial services and insurance. Real GDP for 2016 is forecast to be 1.9% according to EIU. The Chinese government grants Hong Kong preferential access to mainland China for trade and investment. Notwithstanding the reduced investment and trade volumes with China, real GDP still grew in Hong Kong due to strong household consumption in 2015. While China’s growth eased, the Chinese economy is still growing and the import of services will continue to support Hong Kong’s economy and average annual growth of 2.8% is expected for 2016 - 2020. The seasonally adjusted unemployment was 3.3% with a population of 7.3mn. The government is expected to build more public housing and intends to promote more residential housing builds for the next decade. A fall in house prices is forecast for 2016 - 2017 which could put pressure on the government to relax its construction strategy. Regardless of whether government slows down construction, it will face lower receipts from stamp duty and from sales of government land. The administration also has various large scale infrastructure projects such as a third runway at the airport and a bridge to Macau under development. The construction sector will be more dependent on these public projects as the private residential projects slow down. The anticipated real estate price fall (estimated at between 10% and 25%) will impact property investment and personal consumption. The fall may lead to reluctance by the banks to provide new credit.

Banking Industry

Hong Kong is one of the world’s largest FX trading centers and has the largest concentration of insurers in Asia. The finance industry employed approximately 215,000 people in 2014 and generated more than 16% of the output in 2014. It is one of the world’s most sophisticated financial centres. Bank lending rates are expected to rise from approximately 5% to nearly 9% by 2019 which is in line with US interest rates. The HK dollar is pegged to the US dollar. Given the low loan to value lending in Hong Kong the expected fall in real estate prices should not significantly impact the banks. Further slowdown in China could, however, have broader implications for the banks and the economy as a whole. Shanghai is seen by some as a financial centre competitor to Hong Kong but the latter benefits from lower taxes, lighter regulation and a deeper talent pool. The banks support domestic business in the Special Administrative Region as well as the larger mainland market. Lending to China has increased and was approximately 14.5% of total lending in 2015 compared to around 13% in 2014. Property development and investment lending covered approximately 25% of the total lending in 2015 and residential mortgages accounted for another 22.5% approximately. Property lending is expected to decline in line with the fall in house prices and the expected increase in interest rates. The Hong Kong regulators also manage the real estate lending closely and in 2015 reduced the LTV ratio and debt servicing ratio to cool the market. As a result, NPLs are not expected to increase significantly. According to the EIU, bank lending growth is expected to slow to sub 5% levels on an annual basis through 2019 compared to growth of 12.6% in 2014, 16% in 2013 and 9% in 2012. Most banks are licensed and these include HSBC, Bank of China (Hong Kong), Hang Seng and Standard Chartered. Registered licensed banks and deposit taking companies also exist but with smaller activities.

22

2015 at a Glance

The largest banking transaction in 2015 was China Cinda Asset Management Co’s acquisition of Nanyang Commercial Bank from BOC Hong Kong (Holdings) Limited for $8.772bn. China Cinda is the Chinese state established asset management company responsible for managing NPLs originated by China Construction Bank. It was listed on the HK stock exchange in 2013 (second biggest IPO that year) with Blackrock, JP Morgan and UBS previously considered to be investors along with the Chinese social security fund which holds 25% of the public float. The Ministry of Finance held 63% as of December 2014. Cinda has since sought to diversify away from NPL management and is involved in securities, trust, leasing, insurance as well as the core NPL management product. BOC Hong Kong stated that they intend to use some of the proceeds to expand into the ASEAN region and the ‘One Belt One Road’ initiative unveiled by Xi Jinping in 2013. The COSCO restructuring discussed in our report on China also impacted numerous Hong Kong leasing entities such as China Shipping Nauticgreen Holdings Company Limited, the container leasing business. Swiree Capital, a Hong Kong based company engaged in the pawn business, commercial factoring and leasing, invested $200mn for a 61.2% stake in Sino Credit Holdings Limited. Sino Credit has a similar product offering consisting of a pawn business, financial leasing, money lending and factoring. It is based in Guangzhou and has total assets in excess of $60mn. Target customers are SMEs, micro-enterprises and retail consumers.

Hong Kong Transactions 2015

23


Equity Transactions

Deal Type Name Date Asset Type Buyer Seller Value ($'m)

TOTAL


Nanyang Commercial Bank

Dec-15 Bank China Cinda Asset Management Co Ltd

BOC Hong Kong (Holdings) Limited

8,772

China Shipping Nauticgreen Holdings Company Limited; Dong Fang International Investment Limited; Helen Insurance Brokers Limited

Dec-15 Leasing China Shipping Container Lines Company Limited

China Shipping (HK) Holdings Co Ltd

726

Domestic Sino Credit Holdings Ltd. (61.2%)

Dec-15 Leasing Swiree Capital Limited 200

Hong Kong Leasing Limited

Apr-15 Leasing China Innovative Finance Group Limited (formerly Heritage International Holdings Limited)

China Hoaver Dragon Group Ltd.

201



24

Market Overview Japan

Japan Almost $10bn of deals in 2015 with the majority falling in H2. Leasing and bank deals were similar in volume and the largest transaction was the sale of GE’s leasing business to Sumitomo Mitsui

25

2015 Full-Year

$9,840mn (22 deals)

2015 H1 $2,580mn (8 deals)


Autofinance non-

disclosed (1 deal)

Real Estate Loans $6mn

(1 deal)


$42mn (1 deal)

Credit cards $336mn (3 deals)

Bank $4,488mn (7 deals)

Leasing $4,968mn (9 deals)



Japan Market Overview

26

As a result of these and other acquisitions, the level of overseas lending compared to total lending for the three largest Japanese banks was 29.3% as of December 2015 compared to 16.8% in 2008. The NPL ratio as of March 2015 was 1.1% according to the Financial Services Agency and we expect the ratio to remain stable while interest rates remain at current low levels. 2015 at a Glance

The second half of 2015 was a busy period for domestic transactions in the financial services sector, with all but one of the transactions involving a Japanese buyer. The sole cross-border transaction was comparatively small and related to an existing shareholder, IFCO Systems of Germany, increasing its stake in IFO Japan INC from 22% to 66.7% for $26m. IFCO Japan Inc leases reusable plastic crates for use in the food distribution sector. All other transactions were domestic with the sale of General Electric’s leasing business to Sumitomo Mitsui Finance & Leasing Company Limited being the largest at almost $4.8bn. The sale included GE’s equipment and asset leasing, small ticket leasing and automotive leasing and is expected to close in Q2 2016. The other eight leasing transactions were relatively small and all under $100mn in terms of consideration (where disclosed). In the banking sector, we noted three bank mergers. This trend has arisen due to the declining market size of Japan’s regions as a result of the ageing and declining population. This, along with greater competition, a stagnating economy and the backdrop of low interest rate margins, has led to lower profits. The Bank of Japan’s recent decision to impose negative interest rates is expected to have a further negative impact on the regional banks. The merger between The Higo Bank Limited based in Kyushu (south western Japan) and a local counterpart, The Kagoshima Bank Limited, was the largest merger with an implied value of $1.450bn and formed Kyushu Financial Group. The Group has assets in the region of $70bn and is the third-largest lender in Kyushu, following Fukuoka Financial Group Inc. and Nishi-Nippon City Bank.


According to the EIU, the GDP annual growth rate for Japan was 0.5% in 2015. Annual growth is forecast to be 0.8% in 2016 and then average 0.7% a year for the period 2017 – 2020. Private consumption represents 60% of overall GDP. Growth is expected to be weakest in 2017 as a result of the planned consumption tax rate increase in April of that year which could lead to consumers making purchases ahead of the increase, potentially in 2016. Towards the end of the decade, the Tokyo 2020 Olympics is expected to boost consumer and business confidence. Demographic factors, fundamentally the aging population, will be the main constraint on GDP growth. The population of Japan is 126.6mn and the unemployment rate was 3.4% at the end of 2015. This rate is expected to reduce annually and reach 2.8% by 2020. The Bank of Japan has a target of 2% consumer price inflation but given the low oil prices, strengthening yen and limited growth, this will prove challenging. The inflation rate in 2015 was 0.8% and it is forecast to average 0.3% in 2016. As stated above, there is a planned increase in the consumption tax rate in April 2017, from 8% to 10%, which should boost revenue collection. That said, there remains the potential for this increase to be deferred. EIU does not expect the BOJ to increase benchmark interest rates until 2021 at the earliest. Banking Industry

The banking sector is relatively mature. The sector is largely focused on outward investment, especially Asia, given the widespread use of financial products, narrow interest rate spreads, declining population and slow economic growth in Japan. According to BOJ data, domestic private sector lending increased by 4.7% year on year to September 2015 on the back of favourable financing terms in the market. Notwithstanding the increased lending, the low domestic interest rates put pressure on margins and the larger banks are focused on overseas lending and investment as evidenced by numerous acquisitions since the global financial crisis including BTMU’s investment into Bank of Ayuthaya in 2013, SMBC’s investment into BTPN of Indonesia in 2013 and Mizuho into Vietcombank in 2011.

27

The Joyo Bank Limited merged with Ashikaga Holdings Co Ltd (parent to Ashikaga Bank) for a similar ($1.444bn) implied value to that of the Higo Bank deal. Post merger, the bank will have 331 branches (in nine prefectures) which is reputed to be the largest regional bank branch network in Japan although both banks are expected to keep their own brand. The Bank of Yokohama Limited merged with Tokyo centred Higashi-Nippon Bank Limited. Both institutions are publicly traded and will be held under the newly established Concordia Financial Group Ltd. The implied value of the merger was $575mn. Management expects to deliver increased efficiencies and synergies to drive shareholder value. Bank of Yokohama Limited has over 4,600 employees and c200 branches compared to Higashi-Nippon Limited with 1,400 or more staff and c80 branches. Management is forecasting just under a $1bn in profit for the 2020 fiscal year. Earlier in the year, Sumitomo Mitsui Trust Holdings Inc announced the acquisition of Citi Cards Japan Inc. for $336mn. In late 2014, Citigroup Japan Ltd announced the sale of their retail banking business to SMBC Trust Bank Limited for $249mn. We are aware that loan portfolio transactions do take place in Japan but full counterparty details and values are rarely disclosed. We have also seen the external financing of corporate borrowers, at a discount to par, as a means for a lender to transfer the asset off balance sheet.

Japan Transactions 2015

28


Equity Transactions


TOTAL

Note: Merger transactions are in BLUE font


IFCO Japan Inc(66.67%)

Aug-15 Leasing IFCO Systems Mitsubishi Plastics Inc; MeijiRubber & Chemical Co Ltd

26

Domestic Oita Lease CompanyLimited (53%)

Dec-15 Leasing The Oita Bank, Ltd. Investor Group Led byMitsubishi UFJ Lease &

15

Citibank Japan Ltd.(Retail banking

Bank SMBC Trust Bank Ltd. Citibank Japan Ltd. 249

Kirayaka Lease (90%) Dec-15 Leasing Jimoto Holdings, Inc. Showa Leasing Co Ltd 24

General ElectricCompany (LeasingBusiness in Japan)

Dec-15 Leasing Sumitomo Mitsui Finance andLeasing Company, Limited

General Electric Company 4,773

Ashikaga Holdings CoLtd

Nov-15 Bank The Joyo Bank Ltd. ORIX Corporation; NomuraHoldings, Inc.

1,444

Aruhi LeaseCorporation

Oct-15 Leasing Sumitomo Mitsui TrustPanasonic Finance Co., Ltd.

Aruhi Corporation

ShinGinko Tokyo Ltd Sep-15 Microfinance/Microcredit

Tokyo TY Financial Group Tokyo MetropolitanGovernment

42

Hokuetsu Card Co.,Ltd (54.1%)

Sep-15 Credit cards The Hokuetsu Bank, Ltd.

Taisho Bank Sep-15 Bank TOMONY Holdings Inc The Bank of Tokyo-Mitsubishi UFJ, Ltd.; SompoJapan Insurance Inc; e-sanshin; TOYO PROPERTYCo Ltd

43

Higashi-Nippon BankLtd.

Sep-15 Bank The Bank of Yokohama Ltd 575

Hachijuni ShinyoHosho (95%)

Aug-15 Leasing The Hachijuni Bank Ltd Showa Shoji Co Ltd; ChoeiCorporation; Hachijuni DCCARD Co Ltd; HachijuniLease Co Ltd; Nagano BusTerminal Co Ltd

63

Ichinen TD LeasingCo., Ltd.

Aug-15 Leasing Ichinen Holdings Co Ltd Tokyo Electric PowerCompany Incorporated

Premium FinancialServices Co Ltd

Jun-15 Autofinance AZ-Star iSigma Capital Co Ltd

Sumitomo Mitsui TrustCapital Co.,Ltd.(95.1%)

Apr-15 Bank Everglory Group Limited Sumitomo Mitsui Trust Bank,Limited

Citi Cards Japan Inc Mar-15 Credit cards Sumitomo Mitsui Trust HoldingsInc

Citi 336

The Kagoshima Bank Mar-15 Bank The Higo Bank Ltd 1,450Michinoku Lease CoLtd (75%)

Mar-15 Leasing Michinoku Bank Ltd JA Mitsui Leasing, Ltd 16

Resona Holdings Inc(5.59%)

Feb-15 Bank Nippon Life InsuranceCompany; The Dai-ichi LifeInsurance Company Limited

727

Hirogin Hosho(71.4%); Hirogin CardService Co Ltd(40.3%)

Jan-15 Credit cards The Hiroshima Bank Ltd Hiroshima Shinai RealEstate; Hiroshima ActionService Co Ltd

V Lease (50%) Jan-15 Leasing NTT Finance Corporation Development Bank of JapanInc.

51



29

Market Overview Korea

Korea 11 equity deals transacted with a value of $1.66bn compared to 48 loan portfolio trades and a value of $3.5bn

30

2015 Full-Year

$5,188mn (60 deals)

2015 H1 $2,390mn (27 deals)


Real estate Loans non-

disclosed (1 deal)

Credit cards $169mn (1 deal)


Bank $435mn (4 deals)

Consumer Finance $754mn (2 deals)




Korea Market Overview

31


The GDP annual growth rate was 2.6% for 2015 compared to 3.3% for 2014. EIU forecasts that economic expansion will remain sluggish at 2.7% in 2016. Private consumption grew at a relatively subdued rate due to consumer uncertainty. EIU expects the economy to remain on a low growth projectory in 2016 - 2020, with average annual growth of 2.6%. Private consumption will remain under pressure owing to greater household leverage. Exports will return to growth in 2016 - 2019 as the global economy recovers gradually but will remain muted owing to the slowdown in China's economy, a key trading partner. Banking Industry

There are six nationwide commercial banks, six regional banks, five government-led banks and 39 foreign bank branches in Korea. Due to a robust banking industry, banks are subject to prescriptive regulations with close supervision and intervention by five major administrative bodies (Ministry of Strategy and Finance, Bank of Korea, Financial Services Commission, Financial Supervisory Service, Korea Deposit Insurance Corporation). 2015 at a Glance

We noted 11 equity transactions in Korea, three of which involved overseas buyers with a total deal value of $546mn compared to $1.100bn of domestic deals. The largest transaction involved GE’s holding in Hyundai Capital Services Inc (HCS), the domestic captive finance company of Hyundai Motor Group. At Q3 2015, Hyundai Capital had c$17bn of assets, almost 80% of which was auto-related and the remainder covering personal and mortgage loans. GE sold 23% of its HCS equity to Hyundai Motor Corporation for $595mn. GE’s intention for its remaining 20% holding in HCS has not been disclosed. The other transaction in the consumer finance sector was the third party allotment of almost 19% equity in JB Financial Group which owns Jeonbuk Bank, Kwangju Bank and JB Woori Capital. The investors were Jubilee Asia, Singwand Holding and Asia Alternatives Malta, (the latter two being Singapore-based investment firms and Jubilee Asia being Netherlands based) which acquired the shares for $159mn in aggregate.

Other cross border transactions included the US private investment firm, JC Flowers, acquiring a c90% stake in KT Capital for $274mn. KT Capital provides leasing services to telco businesses. JC Flowers, which has a strong record of investing in financial institutions such as Shinsei Bank, NIBC and OneSavings Bank Plc, also bought Doosan Capital, another leasing firm. The deal was under $10mn and appears in Appendix II to this report. In January 2016, it was announced that KT Capital had acquired Korea’s second largest savings bank, HK Savings Bank, for $185mn. The third cross border deal involved Taiwan’s Yuanta Commercial Bank acquiring Hanshin Mutual Savings Bank for $113mn (subject to regulatory approval which is expected in Q1 2016), the first Korean acquisition by a Taiwanese bank. Yuanta cited c$2bn of Korea/Taiwan cross border investment in 2014 and good growth potential as reasons for the acquisition. If approved, Hanshin will be Yuanta’s second overseas investment with Tong Yang Savings Bank in the Philippines, having been acquired earlier this year. The Bank also recently announced the acquisition of Ta Wong Bank (Taiwan) for $1.73bn. Another US company, outside of GE, reducing exposure to Korea was Citibank which sold its financial leasing / consumer finance business to Apro Service Group, the credit card and instalment finance business for $14mn. Citi advised that the transaction is in line with its global strategy of focusing on core sectors where it has a competitive advantage, including its consumer banking business in Korea. Earlier in the year, BNK Financial Group Inc announced a $297mn merger with Kyongnam Bank which closed in Q4 2015 and resulted in BNK being Korea’s 5th largest domestic financial group.

32

The loan portfolio market in Korea is very active and deals are often made public. Banks began clearing bad debts via large scale portfolios in 2009 and buyers started generating profits from such investments. While bidding prices for NPL portfolios have increased and buyer profit margins have decreased, supply and demand was still high in 2015. We have identified 48 deals during the year, the total deal value is estimated at approximately $3.5bn with an average portfolio price of 78.2%. The market is largely domestic with the most active sellers being Industrial Bank of Korea, Woori Bank and KB Kookmin Bank and the most active buyers were UAMCO, Daishin F&I and MyAsset. The NPL ratio for the banking sector is 1.5% and we expect the current trend and volumes of the loan portfolio deals to continue for the next few years.

Korea Transactions 2015

33

Equity Transactions



JB Financial GroupCo., Ltd. (18.62%)

Oct-15 Consumer finance Jubilee Asia B.V.; SingwandHolding Pte Ltd.; Asia

159

Hanshin MutualSavings Bank

Aug-15 Bank Yuanta Commercial BankCompany Limited

AON Holdings LLC 113

KT Capital Corporation(89.55%)

Jun-15 Leasing J.C. Flowers & Co. LLC KT Corporation 274

Domestic Hyundai CapitalServices, Inc. (23.3%)

Dec-15 Consumer finance Hyundai Motor Corporation; KiaMotors Corporation

General Electric Company 595

Citigroup CapitalKorea, Inc.

Dec-15 Leasing Apro Service Group Co., Ltd. Citibank Korea Inc 14

Gongpyung SavingsBank (34%)

Nov-15 Bank Texcell-NetCom Co., Ltd. Ask 14

Union Savings Bank(45.4%)

Oct-15 Bank Hot-Tech Co Ltd 11

NT Development 1stCo., Ltd

Apr-15 Real estate Loans Seoul Luchen Co., Ltd. Taihan Electric Wire Co.,Ltd.

KEB HanaCard Co Ltd(10.4%)

Apr-15 Credit cards Hana Financial Group Inc SK Telecom Co., Ltd. 169

Kyongnam Bank(43.03%)

Apr-15 Bank BNK Financial Group Inc 297

SC Savings Bank, SCCapital

Jan-15 Undisclosed bidder Standard Chartered BankKorea Ltd



Korea Transactions 2015

34


Deal Type Name Date Asset Type Buyer Seller Value ($'m)Portfolio Not known Dec-15 Secured NPL UAMCO Confidential 117.8

Not known Dec-15 Secured NPL UAMCO Confidential 124.3Not known Dec-15 Secured NPL KDFC Confidential 63.2Not known Dec-15 Secured NPL UAMCO Confidential 118.1Not known Dec-15 Secured NPL UAMCO Confidential 66.0Not known Dec-15 Secured NPL KDFC Confidential 55.2Not known Dec-15 Secured NPL Daishin F&I Confidential 107.6Not known Dec-15 Secured NPL UAMCO Confidential 35.9Not known Dec-15 Secured NPL Myasset Confidential 49.5Not known Nov-15 Secured NPL Myasset Confidential 54.0Not known Nov-15 Secured NPL RESERVE NOT MET Confidential -Not known Nov-15 Secured NPL Daishin F&I Confidential 118.1Not known Nov-15 Secured NPL UAMCO Confidential 76.2Not known Nov-15 Secured NPL Myasset Confidential 53.0Not known Nov-15 Secured NPL Mirae Asset Confidential 69.3Not known Oct-15 Secured NPL Daishin F&I Confidential 77.2Not known Oct-15 Secured NPL Woori IB Confidential 42.9Not known Oct-15 Secured NPL Eugene Asset Management Confidential 65.6Not known Sep-15 Secured NPL Myasset Confidential 76.2Not known Sep-15 Secured NPL KEB F&I Confidential 49.8Not known Aug-15 Secured NPL Daishin F&I Confidential 69.8Not known Aug-15 Secured NPL KB Asset Management Confidential 86.6Not known Aug-15 Secured NPL UAMCO Confidential 76.3Not known Aug-15 Secured NPL OSB Savings Bank Confidential 77.9Not known Aug-15 Secured NPL Daishin F&I Confidential 76.8Not known Aug-15 Secured NPL Daishin F&I Confidential 49.4Not known Jul-15 Secured NPL Eugene Asset Management Confidential 36.0Not known Jun-15 Secured NPL UAMCO Confidential 144.9Not known Jun-15 Secured NPL UAMCO Confidential 123.3Not known Jun-15 Secured NPL OK Savings Bank Confidential 75.0Not known Jun-15 Secured NPL UAMCO Confidential 63.2Not known Jun-15 Secured NPL UAMCO Confidential 73.9Not known Jun-15 Secured NPL UAMCO Confidential 53.8Not known Jun-15 Secured NPL Cyrus Confidential 188.0Not known Jun-15 Secured NPL UAMCO Confidential 98.7Not known Jun-15 Secured NPL KB Asset Management Confidential 76.7Not known May-15 Secured NPL Daishin F&I Confidential 77.1Not known May-15 Secured NPL Myasset Confidential 121.2Not known May-15 Secured NPL Eugene Asset Management Confidential 27.5Not known May-15 Secured NPL NH Confidential 11.6Not known Apr-15 Secured NPL Daishin F&I Confidential 54.3Not known Mar-15 Secured NPL KDFC Confidential 66.2Not known Mar-15 Secured NPL KB Asset Management Confidential 84.8Not known Mar-15 Secured NPL Daishin F&I Confidential 68.4Not known Mar-15 Secured NPL Daishin F&I Confidential 55.9Not known Mar-15 Secured NPL KEB F&I Confidential 56.8Not known Feb-15 Secured NPL KB Asset Management Confidential 68.6Not known Feb-15 Secured NPL KB Asset Management Confidential 50.7

TOTAL 3,533.3


35

Market Overview Indonesia

Indonesia Cross-border banking deals were prevalent in 2015 with Japanese, Korean and Taiwanese banks investing in Indonesian banks

36

2015 Full-Year

$2,303mn (11 deals)

2015 H1 $779mn (5 deals)


Leasing non-

disclosed (1 deal)

Autofinance $66mn (1 deal)

Consumer Finance $358mn (2 deals)

Bank $779mn (6 deals)

Portfolio $1,100mn (1 deal)



Indonesia Market Overview

37


The main contribution to Indonesia’s economic growth comes from private consumption which was estimated to be in excess of 50% of nominal GDP and while this slowed in 2015, overall growth was supported by an increase in government spending. The annual GDP growth rate for 2015 was 4.8% according to EIU. Tight monetary policy and high inflation is expected to have a negative impact on private consumption in 2016, however, the medium-term outlook is strong, as the oil price looks set to remain low and the number of formal-sector jobs will continue to rise. According to the EIU, investment growth is expected to recover to an annual average of 5.4% for 2016-2020, as improvements in the government’s approval processes and rising commodity prices encourage investment. Investment will be supported by public infrastructure works that are funded by savings made from cutting fuel subsidies. Government consumption growth will be underpinned by President Jokowi's efforts to improve public services. The consumer price index is forecast to rise by an average of 4.9% a year from 2016 - 2020. The increase in subsidized fuel costs caused consumer price inflation to accelerate to 6.4% in 2015. However the low international oil costs and the strengthening Rupiah will cause inflation to abate in 2016. The central bank interest rate was 7.5% for the majority of 2015. Banking Industry

Foreign banks are expected to continue their involvement in Indonesia despite restrictions on the ownership of local lenders. Given the market size in Indonesia, there appears to be too many banks and the central bank is pushing for consolidation within the banking sector. We understand that the government will consider 100% ownership of a domestic bank by a foreign investor (currently capped at 40%) subject to the foreign bank acquiring two banks and then agreeing to merge, thus creating sector consolidation.

EIU forecasts that the loan demand will rise by 14% a year through 2016 – 2020 in local currency rate (8% in real terms) driven by average economic growth of 5.38% (real GDP). The increase in employment and wages also contributes to this rise. Historically, lending increased by 15.66% annually between 2011 – 2015). Indonesian credit expansion is driven by consumer borrowing of which only 30% of household borrowing is used for housing purchases. Real estate lending in Indonesia remains uncertain as consumers recall the Asian financial crisis which was caused by poor quality real estate lending. Credit to households from all lenders stood at USD 130 billion at the end of October 2015, an 8.8% increase year on year. The Central Bank is introducing further regulatory change. Banks must conduct business activities in accordance with their BUKU classification by June 2016. Banks are allowed to stay in their existing BUKU group, however, business activities of BUKU 1 are very limited. Thus, if Banks want to have more flexibility in terms of banking activities, they need to move to higher BUKU levels by injecting core capital. The higher BUKU levels require greater capital and new investors / owners are a potential route to that capital. 2015 at a Glance

Indonesia had 11 transactions in 2015, one of which was a loan portfolio trade and of the 10 equity deals, six related to banks. Shinhan Bank, the listed bank with c$200bn of loans, acquired 75% of Centratama Nasional Bank for $36mn and then increased its equity stake in Bank Metro Express PT from 40% to 98%. The 40% investment cost Shinhan Bank c$54mn although the cost of the increased position was not disclosed. Both transactions have been approved by OJK. The Shinhan Financial Group also made a further investment with Shinhan Card Co Ltd acquiring a 50% stake in Pt Swadharma Indotama Finance, the Indonesian consumer finance business for $8mn (appears in Appendix II) . The largest bank transaction was in February 2015 when Sumitomo Corporation was reported to have acquired a 17.5% stake in the retail bank, BTPN from TPG. TPG retains a c8% holding having acquired c72% in 2008 and Sumitomo Mitsui holds 40%.

38

The 40% investment in Bank Mayapada Internasional Tbk PT for $282mn by Cathay Financial Holding Co Ltd shows how attractive the Indonesian market is, with investors coming from Korea, Japan and Taiwan. The listed bank is within the Top 25 of Indonesian banks by total assets with c. $2.915bn as of December 2015. Other transactions involving Japanese investors include: • Itochu Corporation acquiring 50% and Century

Tokyo Leasing 20% of the equity in the construction machinery leasing arm of Hitachi. The strategy being to deliver better quality services and boost sales on the back of increased demand for construction and infrastructure. The value of the deal was not disclosed.

• SMBC acquired 35.1% stakes in PT Oto Multiartha and Summit Oto Finance, the autofinance business and motorcycle finance business, respectively, and

• subsequently referred to as Summit OTO Group from Sumitomo Corporation. The deal was reported in the Japanese media to have a value of $350mn. Sumitomo Corporation will hold 49.9% of the equity in Summit OTO Group.

The sale of a 39% stake in Panin Bank by ANZ was announced during Q3 2015 but has yet to close at the time of writing. Regarding loan portfolios, RBS completed the sale of $1.1bn of non-core, performing assets to Deutsche. BNI was reported to be launching a c$100mn SME / corporate portfolio but it has not entered the market while Raffeisen Bank of Austria did market a corporate loan portfolio but it failed to trade.

Indonesia Transactions 2015

39


Equity Transactions Deal Type Name Date Asset Type Buyer Seller Value ($'m)

Panin Bank Ongoing Bank Pending ANZBank Metro Express PT (58%)

Nov-15 Bank Shinhan Bank

PT Oto Multiartha (35.1%); PT Summit Oto Finance (35.1%)

Oct-15 Consumer finance Sumitomo Mitsui Banking Corporation

Sumitomo Corporation 350

Sinar Mitra Sepadan Sep-15 Autofinance ORIX Corporation ARIA Investment Partners III 66Centratama Nasional Jun-15 Bank Shinhan Bank 36Bank Tabungan Pensiunan Nasional Tbk, PT (17.5%)

Feb-15 Bank Sumitomo Corporation TPG Capital LP 461

P.T. Hexa Finance Jan-15 Leasing Itochu Corporation; Century Hitachi Construction Bank Mayapada Internasional Tbk PT (40%)

Jan-15 Bank Cathay Financial Holding Co., Ltd

282

Domestic PT Bank Antardaerah Jul-15 Bank PT. Bank Windu Kentjana Sub-total 1,195Deals sub $10m 8TOTAL 1,203

Cross-border



Corporate Jul-15 Portfolio Deutsche Bank AG RBS 1,100

TOTAL 1,100

40

Market Overview Thailand

Thailand No equity transactions occurred during 2015 but there were 13 loan portfolio trades largely consisting of secured residential assets

41

2015 Full-Year

$1,819mn (13 deals)

2015 H1 $0mn

(0 deals)





Thailand Market Overview

42


Thailand’s GDP annual growth rate for 2015 recovered to 2.8% compared to 0.9% for 2014, resulting from the calmer political situation, higher fiscal budget disbursements, depreciation of Thai Baht and strengthening tourism earnings. Nevertheless, both internal and external risks e.g. high household debt, drought, falling agricultural commodity prices and China’s economic slowdown create challenges to economic growth. The EIU forecast 2.5% average growth for 2016 and 2.9% average annual growth for 2017. According to EIU, CPI showed negative growth of 0.9% at the end of 2015 compared to 0.6% in the previous year due to a decline in energy and food prices which will help raise purchasing power and create favorable conditions for further expansionary monetary policy. Throughout the second half of 2015, the MPC maintained its main policy rate at 1.50% recognizing that the Thai economy continued to face negative factors, particularly a slowing global economy and higher volatility in the global financial markets. However, monetary conditions, including exchange rate depreciation, remain supportive to the economic recovery. The Thai unemployment rate is 0.97% according to the BOT and has averaged only 1.51% for the period 2001 - 2015. Banking Industry

According to the EIU, bank lending fell by 5.6% between December 2015 and December 2014. Lending is expected to grow by an average of 8.3% from 2016 – 2020 largely driven by consumer and SME lending. NPLs increased from 2.2% at the end of 2014 to 2.8% (of total loans) as of October 2015 according to EIU. A higher proportion of special-mention loans, defined as 30 to 90 days overdue, also indicates that more loans will turn sour in the period ahead. The special-mention loans rose to 4.1% at the end of 2015 from 3.8% (of total loans) at the end of December 2014. The BOT state that the banks’ net profit growth increased 2.2% as of December 2015 compared with 5% growth as of December 2014. The reduced growth was attributed to increased provisions as a buffer to the loan quality deterioration.

According to the World Bank, 78% of the Thai population had an individual or shared bank account at a formal financial institution (up from 73% in 2011). While 50% of those surveyed in 2014 had borrowed money in the previous year, only 15% had received a loan from a financial institution. Further, 81% had saved monies but only 41% did so at a financial institution. Only 6% of those surveyed had a credit card and 11% had a mortgage.

2015 at a Glance

There were no equity transactions in 2015 although the potential sale of Scotiabank’s 49% shareholding in Thanachart bank was announced in December 2015 and the government is seeking to sell more than 50% of the equity in iBank, an Islamic bank. While there was an absence of completed equity deals, there were 13 loan portfolio transactions. With regards to the completed transactions, one related to a foreign bank exiting the market and the rest related to domestic banks such as TMB, Thanachart Bank and SME Bank. There were seven banks overall which sold loan books in 2015. The portfolios ranged from as little as $4mn to approximately $500mn. The overall average was $140mn. The buyers of the loan portfolios were largely domestic institutions. The total asset size sold in 2015 was $1.819bn compared to $1.622bn in 2014. Unlike Korea, the NPL market is private and counterparty details are rarely disclosed. In 2016 we have seen five portfolios launched for sale in Q1 suggesting that 2016 could exceed 2015 in terms of deal volume.

43


Equity Transactions Deal Type Name Date Asset Type Buyer Seller Value ($'m)

TOTAL


Deal Type Name Date Asset Type Buyer Seller Value ($'m)Portfolio 13 transactions Portfolio Various Various 1,819TOTAL 1,819

Thailand Transactions 2015

44

Market Overview Taiwan

Taiwan There were only 2 transactions in Taiwan during 2015 but the sale of Ta Chong Bank to Yuanta Commercial Bank was the first bank transaction in excess of $1bn since 2011

45



2015 Full-Year

$1,592mn (2 deals)

2015 H1 $431mn (1 deal)



Taiwan Market Overview

46


The GDP annual growth rate was 0.7% in 2015 with the last two quarters showing negative growth as a result of weaker foreign demand. Reduced exports of goods and services are the key reason for the deterioration in Taiwan’s economic fortunes. Taiwan has developed some high value-added industries, including high-end electronics and has been developing the international reputation of its domestic companies and enhancing its services sector. However, the EIU estimates real GDP growth to average 1.9% annually in 2016 - 2020 due to their exclusion from free-trade agreements, the slowing growth in the largest export market, mainland China, slower productivity and an ageing population (23.4mn total population). In the long-term, the changing relationship with China will likely be the most influential issue in its performance. As China becomes an all-out competitor, in addition to a key market, Taiwan will have to cope with the new norm of 2% - 3% GDP growth. As the weakness in global oil constrains price increases, the EIU reported a fall in consumer prices to 0.3% in 2015. Furthermore, EIU estimates the consumer inflation will average 1.5% a year in 2017 - 2020. The depreciation of the New Taiwan Dollar and the moderate strengthening in global commodity prices will put upward pressures on imported inflation in 2016 - 2017. There is also the risk that fluctuations in food prices could cause a short-term spike in inflation. The CBC cut its benchmark interest rate from 1.875% to 1.75% in September 2015 and to 1.625% in December, due to the stalling economic growth and to improve exports The New Taiwan dollar will also face downward pressure against the US Dollar following the tightening of financial policy by the Federal Reserve in December 2015. Banking Industry

Taiwan’s financial sector remains fragmented, highly saturated and subject to government involvement (seven of the top 10 banks are state owned). Intense competition for customers has squeezed banks’ net interest margins to among the lowest levels in Asia. Moreover, the industry remains relatively small. An increase in the size of the banking sector would allow for more efficient operation and improve the ability of Taiwan’s banks

to compete for business in other Asian countries. Taiwan’s government recently passed several financial acts including The Banking Act which stated that the ceilings for both “the total investments made by a bank” and “a bank’s investments in non-financial related enterprises” shall be based on 40% of “net worth” from “share capital”. These changes have allowed domestic banks to expand their business in international markets through mergers and acquisitions such as Yuanta Commercial Bank’s investments into Korea and Philippines. The government is encouraging domestic banks to improve operating performance and increase economies of scale through mergers and acquisitions following the new regulations. However, these have been gradual as mergers typically have a negative impact on employment levels and there has been resistance from politicians and trade unions. Given the low net interest margin, domestic banks are expected to look to China and South East Asia for growth Lending growth level was steady from 2011 - 2015 with annual growth of 5.28% and is expected to continue as the regional economy continues to grow. Much of the credit growth has been real-estate based, with lending for real estate investment accounting for 45% of the total lending as at June 2015. Such growth creates some concern for future NPL if there is a real estate correction although given the CBC’s loan to value policy (capped at 50% for third and subsequent homes) and the current low NPL level of 0.26% for domestic banks, the risk appears manageable. 2015 at a Glance

The largest deal of 2015 was Yuanta Commercial Bank’s acquisition of domestic rival Ta Chong for $1.161bn from Carlyle Private Equity, the first acquisition by a Taiwanese bank in excess of $1bn since 2011. The only other transaction in Taiwan related to the Hong Kong based, China CITIC Bank, which made a 3.8% equity investment into CTBC. As part of the transaction, CTBC also invested in CITIC Bank International (China) Limited enabling CTBC to broaden its services into China.

Taiwan Transactions 2015

47


Equity Transactions


TOTAL



CTBC Financial Holding Co Ltd (3.8%)

May-15 Bank China CITIC Bank Corporation Limited

431

Domestic Ta Chong Bank Aug-15 Bank Yuanta Financial Holdings Co Ltd

The Carlyle Group 1,161



48

Market Overview Philippines

Philippines There were eight transactions worth $1.5bn in 2015, the majority of which related to bank acquisitions

49

Leasing $37mn (1 deal)


$47mn (1 deal)



2015 Full-Year

$1,506mn (8 deals)

2015 H1 $1,136mn (6 deals)



Philippines Market Overview

50


According to EIU, Philippines annual GDP growth was 5.8% for 2015 (6.1% for 2014) and has shown positive growth at similar levels for the past few years. Growth for 2015 was achieved as a result of further increases in private investment and higher private and public expenditures. The government expenditure helped the tourism, agriculture and manufacturing sectors. Forecasts predict a marginal increase to 6.1% during 2016 and annual growth to average 5.9% for the period 2016 – 2020 due to strong private consumption achieved from strong cash remittance inflows, lower unemployment and low inflation. Unemployment is running at 6.3% (slightly down compared to 6.8% in 2014) and core inflation is running at 1.4%. In 2015, the main policy interest rates, overnight repurchase (repo) rate and reverse repo rate, were unchanged at 6% and 4% respectively, as economic growth held steady and inflation was subdued. Banking Industry

The BSP allows foreign banks to acquire 100% of an existing bank, or 100% of a new banking subsidiary or to establish a branch. With regards to rural banks and thrift banks, foreign investors are only allowed up to 60% of voting stock. Of the 37 universal and commercial banks, 17 are foreign bank branches or subsidiaries including BTMU, Mizuho and SMBC. As at 2014, about 30% of adults had a bank account at a formal financial institution, and over 20% had a debit card, according to the World Bank’s Global Financial Inclusion Database. Only c15% of adults had saved money in an account with a financial institution in the past year, while just over 9% had used community-based savings method (such as a savings club). Although almost 70% of adults had borrowed money in the past year, just under 12% had used a formal financial institution, while almost 49% of adults borrowed from family and friends. Only about 5% of Filipinos had an outstanding mortgage in 2014 and only 3% had a credit card according to EIU. Total loan portfolio and deposit liabilities have grown by a CAGR of 12.8% and 11.4%, respectively, between 2010 and 2015, and 14.4% and 8.7% for 2015 in local currency terms according to BSP.

According to the EIU, the expected growth in loans will average 11% a year for the period 2016-2020. It is also expected that bank deposits will grow at a similar pace to loans in 2016-2020, expanding by 10.9% a year in local-currency terms. As a result, the loan-deposit ratio will hold steady during the forecast period. Given the relatively stable economy, the attractiveness of the retail banking sector, and the fact that foreign investors can own 100% of commercial and universal banks, we believe that there will be more bank acquisitions and / or investments in 2016. 2015 at a Glance

The banking sector in the Philippines was particularly active with six of the eight announced deals involving banks. Regulatory changes allowing foreign institutions to invest in Philippine banks were introduced during 2014 and, so far, one Taiwanese bank has been quick to acquire. Yuanta Commercial Bank acquired Tong Yang bank for $10m. The Gaisano family sold a 51% stake in the thrift bank subsidiary, Wealth Development Bank Corp., to Woori Bank of South Korea for an estimated $20mn. Cebu-based retailer Vicsal Development Corp., the parent firm of Wealth Development, announced an “investment agreement” with Woori Bank, creating a “strategic alliance” between the foreign bank and one of the country’s leading thrift banks with $150mn of assets, 16 branches and approximately 300 employees. “It is a strategic initiative in response to the liberalization of the country’s banking sector,” according to WealthBank and the deal was expected to increase the net worth of the thrift bank by threefold, strengthen its balance sheet as well as deepen its market reach and product offerings. Under the partnership, WealthBank plans to leverage the world-class facilities and expertise of Woori Bank. It also targets to serve 1.2 million Korean tourists who visit the Philippines each year as well as the 100,000-strong Korean expatriate community in the country. Woori Bank is the oldest and one of the largest banks in Korea. It has the largest Korean bank overseas network with a footprint in 18 countries. "The number of Woori Bank`s overseas branches is expected to reach 230 in February next year, when the stake investment in the savings bank is expected to be

51

finalized," said Sohn Tae-seung, head of Woori Bank`s global business unit. "Our goal is to operate 300 overseas branches by the end of 2016 by entering other markets such as India, China and Indonesia." Four other foreign banks had obtained central bank approval for expansion in the Philippines; SMBC, Industrial Bank of Korea and Shinhan Bank (Korea) and Taiwan’s Cathay United Bank. SMBC opened a branch in Manila in Q3 2015. All of the cross border transactions in the financial services sector in 2015 were relatively small, although in January 2016 we saw Bank of Tokyo Mitsubishi invest $773mn for a 20% stake in Security Bank. In terms of domestic transactions, BDO Unibank (the largest bank in the Philippines) and Philippine Business Bank acquired One Network Rural Bank Inc and Insular Bank Inc respectively. The BDO deal was for $628mn and was considered to be strategically important for BDO as it enabled them to acquire a bank with a branch network of 105 offices and to diversify into the southern part of Philippines. The potential sale of United Coconut Planters Bank has received significant market commentary. The Philippine government is planning to sell its c74% stake in the bank for in the region of $350mn. Interested parties are said to include domestic banks, Taiwanese and Malaysian banks as well as interest from US private equity funds. The process was launched in Q1 2015 but was delayed in Q3 2015 when the Supreme Court granted an injunction to suspend the sale. This was reported as being lifted in October 2015 although there appears to have been little tangible progress with the sale.

Philippines Transactions 2015

52


Equity Transactions


TOTAL


Wealth Development Bank Corp. (51%)

Dec-15 Bank Woori Bank 20

Tong Yang Bank Jun-15 Bank Yuanta Commercial Bank 10BPI Leasing Corporation (49%)

Jan-15 Leasing Century Tokyo Leasing Corporation

Bank of the Philippines Islands

37

Domestic Insular Bank, Inc. Jun-15 Bank Philippine Business Bank, Inc. 12AG Finance, Incorporated

Apr-15 Microfinance/Microcredit

RYM Business Management Corporation

Mr. Tony O. King (Private Investor)

47

Rizal Commercial Banking Corporation (20%)

Apr-15 Bank Cathay Life Insurance Co., Ltd International Finance Corporation; Hegaon Investment Holdings Limited

402

One Network Rural Bank Inc.

Mar-15 Bank BDO Unibank, Inc. DMCI Holdings, Inc. 628

United Coconut Planters Bank

Ongoing Bank Bank of Commerce 350



53

Market Overview Vietnam

Vietnam The transactions in Vietnam were largely a mix of traditional domestic bank mergers and bank nationalisations

54



2015 Full-Year

$1,025mn (8 deals)

2015 H1 $747mn (6 deals)



Vietnam Market Overview

55


Vietnam's economic recovery is continuing apace, with GDP annual growth rate of 6.7% as at December 2015. EIU forecasts the economy is expected to expand by 6.8% on average for 2016 and 6.9% on average for 2017. Underpinning this rate of expansion will be faster private consumption growth which will be grounded in stable price conditions and an increase in wage growth. Increases in government spending will likely slow as the authorities make progress on reforming state-owned enterprises, but we expect that the overall investment activity will be spurred by the government’s policies to liberalize regulations and further integrate with the global economy. A further loosening of monetary policy in the near term will also help to support an acceleration in GDP growth. Meanwhile, foreign investment, especially in the export-oriented electronics sector, is expected to continue to gather momentum, driving an average annual increase of 10.4% in total exports in 2015 - 2019 according to EIU. In general, although the average annual rate of inflation is expected to accelerate in 2016 – 2020 to 3.9%, this is modest compared to the recent average annual inflation rate of 8% (2011 – 2015). Unemployment in Vietnam is currently 2.44% having averaged 2.4% from 1998 - 2015 and the population is 93.4mn. Banking Industry

The Vietnamese banking industry is comprised of a diverse mix of players, ranging from relatively large state-owned commercial banks to small privately held banks. Even though having a significant impact on the overall economy, the sector is facing numerous challenges due to the overheated credit growth in previous years. The rise in bad debts has effected the real economy. Credit growth is sluggish by historical standards, with many companies struggling for finance and banks have been reluctant to make new loans. The NPL ratio has experienced a downward trend from 2012 to 2015. The SBV stated that the uptick in NPLs in recent years was partly due to the implementation of more stringent rules regarding

provisioning. However, there is still a difference between NPL figures provided by the government and those calculated by international organizations. The banking sector is characterized by its small size in terms of deposits and loans, and by the relatively large number of banks, both domestic and foreign. With the instability of the banking system, coupled with the slow credit growth and high level of non-performing loans, mergers and acquisitions are a solution to keep small and medium-scale banks in existence and operate efficiently. The government is also keen to encourage consolidation in the banking sector, and reduce the high level of non-performing loans. Demand for financial services (mainly consisting of banking services) will continue to expand, reflecting rising income and increasing competition in the sector. Government actions to restore macroeconomic stability are expected to bring positive impacts on the financial sector in 2016-2019. EIU expects credit growth to have averaged 19.1% (real 18.2%) in 2015 and 17.55% a year in 2016 - 2019, up from an average 7.7% recorded between 2010 - 2014. Demand for personal financial services such as home loans, car loans and credit cards, is expected to increase in 2016 - 2019. Banks and financial institutions have largely ignored such demand in the past because of the low levels of personal wealth and income prevailing in Vietnam. However, attention is now turning towards the development of mortgages and consumer finance. Debit and credit cards are becoming increasingly popular in Vietnam, and their use is expanding rapidly from a low base. According to the World Bank's survey, 26.5% of those surveyed had a debit card in 2014, up from 14.6% in 2011. There are already numerous foreign investors with shareholdings in domestic Vietnamese banks such as MUFG, Mizuho and SMBC. 2015 at a Glance

The Vietnamese banking sector was active in slightly less conventional ways compared to other countries in this report. In the banking sector we saw four bank mergers and three bank nationalisations.

56

The Sacombank (Saigon Thuong Tin Commercial JSB) merged with Southernbank (also known as Phuong Nam Bank) which was valued at an estimated $256mn in October 2015. The government has been keen to consolidate the banking sector, reduce cross-ownership and reduce bad debts / NPLs. In the same month, Military Bank announced the intention to merge with SongDa Finance and would acquire 89% of its equity from the government. The implied equity value of the deal was $22mn and Military Bank will remain the sixth largest bank in terms of capital and total assets, post acquisition. SongDa Finance had total assets of c$54mn. The largest merger was that between Maritime Bank and Mekong Bank which took place in August 2015 with an estimated value of $585mn. The new bank trades under the name of Maritime Bank and has over $5bn of assets, c5,000 staff and approximately 3000 outlets. The three bank nationalisations were not exactly transactions but did see a change in control with the State Bank of Vietnam becoming the new owner of 100% of the equity in each bank. The mandatory acquisitions were made due to (for Ocean Bank and GP Bank) the operational weaknesses, losses, negative equity and ineffective management. All three banks are to be managed by Vietinbank.

Vietnam Transactions 2015

57


Equity Transactions


TOTAL



Deal Type Name Date Asset Type Buyer Seller Value ($'m)Domestic Song Da Dec-15 Bank Military Bank 22

Southern Sep-15 Bank Sacombank 256GPBank Jul-15 Bank State BankOceanbank May-15 Bank State BankVNCB May-15 Bank State BankMekong Housing Bank Apr-15 Bank Joint Stock Commercial Bank

for Investment and Developmentof Vietnam

159

Mekong Bank Mar-15 Bank Maritime bank 585Sub-total 1,022Deals sub $10m 3TOTAL 1,025

ACRONYMS Meaning

ANZ Australia New Zealand Bank

ASEAN Association of Southeast Asian Nations

AsiaPac Asia Pacific

BAML Bank of America Merrill Lynch

BBVA Banco Bilbao Vizcaya Argentaria

BNI Bank Negara Indonesia

BOC Hong Kong Bank of China Hong Kong

BOJ Bank of Japan

BOT Bank of Thailand

BSP The Bangko Sentral ng Pilipinas

BTMU Bank of Tokyo Mitsubishi UFJ

BTPN PT Bank Tabungan Pensiunan Nasional Tbk

BUKU Classification of Indonesian banks

CBC Central Bank of Taiwan

EIU Economist Intelligence Unit

FX Foreign Exchange

GBV Gross Book Value

GDP Gross Domestic Product

GE General Electric

HK Hong Kong

HSBC The Hongkong and Shanghai Banking Corporation Limited

IFC International Finance Corporation

IPO Initial Public Offering

LTV ratio Loan-To-Value Ratio

MPC Monetary Policy Committee

MUFG Mitsubishi UFJ Financial Group

NPL Non-performing Loans

RBS Royal Bank of Scotland

SBV The State Bank of Vietnam

SME Small-Medium Enterprises

SME Finance Small-Medium Enterprises Finance

SMBC Sumitomo Mitsui Banking Corporation

SOEs State-owned Enterprises

Glossary

58

ACRONYMS Meaning

Telco Telecommunications

TMB Thai Military Bank

FY Fiscal Year

H1 First Half of the Year

H2 Second Half of the Year

mn Million

bn Billion

Q1~Q4 Quarter one ~ four

$’m Million USD

USD US dollars

59

60

Appendix

APPENDIX : Other Transactions in AsiaPac Transactions 2015

61


SINGAPORE Equity Transactions


TOTAL

Deal Type Target/Asset Type Date Target/Asset Type Buyer Seller Value ($'m)Cross-border

Huationg Holdings Pte. Ltd. (49%)

Jun-15 Leasing Mitsui & Co. (Asia Pacific) Pte. Ltd; JA Mitsui Leasing Singapore Pte. Ltd.

28

Hap Seng Capital Pte Ltd

Mar-15 Leasing Lei Shing Hong Limited Hap Seng Consolidated Berhad

174

Sub-total 202

Deals sub $10mTOTAL 202


NEW ZEALAND Equity Transactions Deal Type Name Date Asset Type Buyer Seller Value ($'m)Cross-border

Telecom Rentals Limited

Mar-15 Leasing FlexiGroup Limited Spark New Zealand Limited 80

TOTAL 80


TOTAL


SAMOA Equity Transactions


TOTAL


Westpac Banking Corporation (Samoa, Cook Islands, and Tonga banking operations in Pacific Island)

Jan-15 Bank Bank of South Pacific Limited Westpac Banking Corporation

71

Sub-total 71Deals sub $10mTOTAL 71


62


CAMBODIA Equity Transactions Deal Type Name Date Asset Type Buyer Seller Value ($'m)

CamKo Bank Ongoing Bank Mitsui & Co. (Asia Pacific) Pte. KDICPhnom Penh Ongoing Bank Pending SBI Savings

Sub-totalDeals sub $10mTOTAL

Cross-border


TOTAL


BRUNEI Equity Transactions


TOTAL

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Domestic UOB Bandar Seri

Begawan BranchOct-15 Bank Baiduri Bank Berhad United Overseas Bank

Limited47

Sub-total 47Deals sub $10mTOTAL 47


APPENDIX : Sub $50m Transactions in China Transactions 2015

63

CHINA Sub $50mn Transactions



Shanghai NanlangFinance Lease Limited(51%)

Dec-15 Leasing Jinheng Automotive SafetyTechnology Holdings Limited

Mighty Great Limited;Universal Capital GroupLimited

9

Herald InternationalFinancial Leasing Co.Ltd.

Nov-15 Leasing BMW AG PAG Capital

Beijing Ever GrandInternational FinanceLease Co., Ltd.(51.39%)

Jul-15 Leasing PME Group Limited Wong Lik Ping (PrivateInvestor)

28

Dalian LugangLogistics CompanyLimited (60%)

Jun-15 Leasing Huajun Holdings Limited Zhang Yu (Private Investor) 10

Jiaming FinancialLeasing (Shanghai) CoLtd (75%)

May-15 Leasing Hon Hai Precision Industry CoLtd

23

Dongkui FinancialLeasing (Shanghai)Co. Ltd. (45.41%)

Mar-15 Leasing Dowell Property Holdings Ltd. 23

Domestic Shenzhen Jinying CarLeasing Co., Ltd.(98%)

Dec-15 Leasing Guangdong Rising AssetsManagement Co., Ltd.

Shenzhen Zhongjin LingnanNonfemet Co., Ltd.

16

United Financial Club(51%);Uf Micro Loan (51%)

Nov-15 Microfinance/Microcredit

Shenzhen Haoningda MetersCo., Ltd.

Shenzhen Zhongyu XinbangTrading Co., Ltd.; UnitedFinancial Holdings

40

Ever Fortune FinancialLeasing Co., Ltd.(53%)

Sep-15 Leasing Shanghai Dasheng AgricultureFinance Technology Co., Ltd.

Hebei Aowei Group Co.,Ltd; Hebei Aowei IndustrialGroup Co., Ltd.

8

Jiashi (Xiamen)Finance Lease Limited

Aug-15 Leasing Differ Group Holding CompanyLimited

Mr. Su Xing Zhao; Mr. LiuDefang

16

Highsun Small-LoanCo Ltd (30%)

Aug-15 Microfinance/Microcredit

Guangdong Highsun GroupCo., Ltd.

Guangzhou HighsunIndustrial Group Co Ltd

7

Zhuji HaiboMicrofinance Co Ltd(30%)

Aug-15 Microfinance/Microcredit

Zhejiang Hailiang Co., Ltd. An investor group led byShanghai WanzhengxiangMetal Material Co Ltd

48

Ji'an CountyChangyun MicroCredit Co Ltd (40%)

Jul-15 Microfinance/Microcredit

Ju'an Jufeng Concrete Co Ltd Jiangxi Changyun Co Ltd 8

Deqing Jin Hui Micro-finance Co., Ltd(96.93%)


Zuoli Kechuang Micro-financeCompany Limited

Deqing Jinyin Gao Ke QiangCi Co., Ltd

42

Zhuji Great SoutheastMicro Credit Co Ltd(30%)


China Zhejiang GreatSoutheast Group Corporation

Zhejiang Great SoutheastCo Ltd

22

Shenzhen HuajunFinancial LeasingLimited (30%)

Apr-15 Leasing Harbin He Zhong Hui LiEconomic and Trading Co Ltd

15

Suzhou WuzhongDistrict DongshanAgriculturalMicrofinance Co., Ltd.(40%)

Mar-15 Microfinance/Microcredit

Suzhou Huifang TongdaInformation Technology Co.,Ltd.

Jiangsu Wuzhong JiayeGroup Co., Ltd.

21

Mercedes-BenzLeasing Co., Ltd.(35%)

Mar-15 Leasing BAIC Motor CorporationLimited

26

Aixuedai com Jan-15 Consumer finance Undisclosed bidder 40TOTAL 402

64


JAPAN Sub $10mn Transactions

KOREA Sub $10mn Transactions

INDONESIA Sub $10mn Transactions

VIETNAM Sub $10mn Transactions


APPENDIX : Sub $10m Transactions in AsiaPac Transactions 2015

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Domestic GFA Co Ltd (35.32%) Oct-15 Real Estate Loans Craft Corporation Co Ltd 6

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Domestic Dongbu Capital Co.,

Ltd. (50%)Feb-15 Leasing Dongbu Insurance Co Ltd Dongbu Steel Co Ltd 9


Pt SwadharmaIndotama Finance(50%)

Aug-15 Consumer finance Shinhan Card Co Ltd Salim Group Inc 8

TOTAL 8

Deal Type Name Date Asset Type Buyer Seller Value ($'m)Domestic Southern bank Apr-15 Sacombank 3TOTAL 3

65


66


STRATEGIC ADVISORY Advising owners of debt: • with loan portfolio analysis, development and implementation

of strategic deleveraging options • on structural & operational opportunities to maximise value

including bad bank establishment & operation, operational carve outs, operational wind-downs and outsourced servicing

Advising holders, buyers and sellers in

deleveraging, portfolio

management and investment strategies

SELL-SIDE Full service advisory to vendors of loan portfolios from strategy and preparation to sales execution

BUY-SIDE Supporting investors

with all aspects of due diligence on loan

portfolios including analysing,

understanding and pricing

• The PLAS team members are recognised leaders in loan portfolio advisory projects covering deleveraging advice, buy and sell side mandates.

• The core senior team has advised governments, financial institutions, regulatory authorities and global private equity firms on deleveraging and loan portfolio transactions across every major asset class covering billions of dollars of assets.

• Jonathan Daniel, a Chartered Accountant, Member of the Securities & Investment Institute and qualified banker, is based in Tokyo. He supports Japanese financial institutions with their strategic investments and Tokyo-based financial investors in their acquisition of stressed and problematic loan portfolios.

• Jonathan has 30 years of banking and advisory experience, as both an advisor and a principal investor in loans, bringing a unique perspective to advising clients on portfolio acquisition and divestment.

The team is a recognized leader in global loan portfolio advisory projects covering all aspects of non-core deleveraging from strategy to execution

67


Advised on >$325bn of assets in the last 4 years

Market Leaders

The most experienced team in the

market

AAAAAAAdddddddvi

The leading loan portfolio

sell-side advisor

isssssssssssssssssssssssssssssed

25bbbbbbbbbbbbbbbbbbbbbbbbbbbbnnnnnnnnnn ssetssssssssssssssssssssssss

issssssssssssssed

Depth of market

knowledge and technical expertise

d

A Deloitte process

increases market

confidence in a successful loan

sale

Advised on >$325bn of

assets in the last 4 years

Trusted advisor to the

buyer community

The team is a recognized leader in global loan portfolio advisory projects covering all aspects of non-core deleveraging from strategy to execution

Deloitte Tohmatsu Group (Deloitte Japan) is the name of the Japan member firm group of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee, which includes Deloitte Touche Tohmatsu LLC, Deloitte Tohmatsu Consulting LLC, Deloitte Tohmatsu Financial Advisory LLC, Deloitte Tohmatsu Tax Co., DT Legal Japan, and all of their respective subsidiaries and affiliates. Deloitte Tohmatsu Group (Deloitte Japan) is among the nation's leading professional services firms and each entity in Deloitte Tohmatsu Group (Deloitte Japan) provides services in accordance with applicable laws and regulations. The services include audit, tax, legal, consulting, and financial advisory services which are delivered to many clients including multinational enterprises and major Japanese business entities through over 8,700 professionals in nearly 40 cities throughout Japan. For more information, please visit the Deloitte Tohmatsu Group (Deloitte Japan)’s website at www.deloitte.com/jp/en. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities, insights, and high-quality service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 225,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. © 2016. For information, contact Deloitte Tohmatsu Financial Advisory LLC.

Member of Deloitte Touche Tohmatsu Limited

the biggest financial sector deals of the year asia ... · the biggest financial sector deals of...

Documents